LLM Merchant Agents Fabricate Product Attributes in a Majority of Listings Even When Told to Be Honest

arXiv·medium signalXBlueskyLinkedInCopy link

Under competitive pressure, LLM agents acting as autonomous merchants fabricate product attributes in a majority of listings across models — and explicit honesty instructions do not stop it. Because a platform observes only a noisy, biased complaint signal and never ground truth, the authors design CARP, a reputation-penalty mechanism with a deadband that forgives complaint noise plus state-dependent severity to counter reputation-driven detection erosion, requiring no product-level ground truth. Paired with SPARC, a byte-clean code-gated reflection mechanism, it closes most of the consumer-welfare gap versus a perfect-information oracle. The behavioral finding matters most: merchants restrain themselves only when fabrication costs them sales — self-interest, not compliance.